Chapter 2.32 — SALES AND USE TAX

This chapter shall be known as the "Uniform Local Sales and Use Tax Ordinance."

(Ord. 2756 § 1 (part), 1973)

The rate of sales tax and use tax imposed by this chapter shall be one percent.

(Ord. 3604 § 1, 1985: Ord. 2756 § 1 (part), 1973)

This chapter shall be operative on January 1, 1974.

(Ord. 2756 § 1 (part), 1973)

The city council hereby declares that this chapter is adopted to achieve the following, among other, purposes, and directs that the provisions hereof be interpreted in order to accomplish those purposes:

(a) To adopt a sales and use tax ordinance which complies with the requirements and limitations contained in Part 1.5 of Division 2 of the Revenue and Taxation Code;

(b) To adopt a sales and use tax ordinance which incorporates provisions identical to those of the Sales and Use Tax Law of the State of California insofar as those provisions are not inconsistent with the requirements and limitations contained in Part 1.5 of Division 2 of the Revenue and Taxation Code;

(c) To adopt a sales and use tax ordinance which imposes a tax and provides a measure therefor that can be administered and collected by the California Department of Tax and Fee Administration in a manner that adapts itself as fully as practicable to, and requires the least possible deviation from, the existing statutory and administrative procedures followed by the California Department of Tax and Fee Administration in administering and collecting the California State Sales and Use Taxes; and

(d) To adopt a sales and use tax ordinance which can be administered in a manner that will, to the degree possible consistent with the provisions of Part 1.5 of Division 2 of the Revenue and Taxation Code, minimize the cost of collecting city sales and use taxes and at the same time minimize the burden of record keeping upon persons subject to taxation under the provisions of this chapter.

(Ord. 5652 § 2, 2025: Ord. 2756 § 1 (part), 1973)

Prior to the operative date the city shall contract with the California Department of Tax and Fee Administration to perform all functions incident to the administration and operation of this chapter, provided, that if the city shall not have contracted with the California Department of Tax and Fee Administration prior to the operative date, it shall nevertheless so contract and in such a case the operative date shall be the first day of the first calendar quarter following the execution of such a contract rather than the first day of the first calendar quarter following the adoption of this chapter.

(Ord. 5652 § 2, 2025: Ord. 2756 § 1 (part), 1973)

For the privilege of selling tangible personal property at retail a tax is hereby imposed upon all retailers in the city at the rate stated in Section 2.32.020 of the gross receipts of the retailer from the sale of all tangible personal property sold at retail in the city on and after the operative date.

(Ord. 2756 § 1 (part), 1973)

For the purposes of this chapter, all retail sales are consummated at the place of business of the retailer unless the tangible personal property sold is delivered by the retailer or his agent to an out-of-state destination or to a common carrier for delivery to an out-of-state destination. The gross receipts from such sales shall include delivery charges, when such charges are subject to the state sales and use tax, regardless of the place to which delivery is made. In the event a retailer has no permanent place of business in the state or has more than one place of business, the place or places at which the retail sales are consummated shall be determined under rules and regulations to be prescribed and adopted by the California Department of Tax and Fee Administration.

(Ord. 5652 § 2, 2025: Ord. 2756 § 1 (part), 1973)

An excise tax is hereby imposed on the storage, use or other consumption in the city of tangible personal property purchased from any retailer on and after the operative date for storage, use or other consumption in the city at the rate stated in Section 2.32.020 of the sales price of the property.

The sales price shall include delivery charges when such charges are subject to state sales or use tax regardless of the place to which delivery is made.

(Ord. 2756 § 1 (part), 1973)

Except as otherwise provided in this chapter and except insofar as they are inconsistent with the provisions of Part 1.5 of Division 2 of the Revenue and Taxation Code, all of the provisions of Part 1 of Division 2 of the Revenue and Taxation Code are hereby adopted and made a part of this chapter as though fully set forth herein.

(Ord. 2756 § 1 (part), 1973)

In adopting the provisions of Part 1 of Division 2 of the Revenue and Taxation Code, wherever the state of California is named or referred to as the taxing agency, the name of the city of Palo Alto shall be substituted therefor. The substitution, however, shall not be made when the word “state” is used as part of the title of the State Controller, the State Treasurer, the State Board of Control, the California Department of Tax and Fee Administration, the State Treasury, or the Constitution of the State of California; the substitution shall not be made when the result of that substitution would require action to be taken by or against the city of Palo Alto, or any agency thereof rather than by or against the California Department of Tax and Fee Administration, in performing the functions incident to the administration or operation of this chapter; the substitution shall not be made in those sections, including, but not necessarily limited to, sections referring to the exterior boundaries of the state of California, where the result of the substitution would be to provide an exemption from this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not otherwise be exempt from this tax while such sales, storage, use or other consumption remain subject to tax by the state under the provisions of Part 1 of Division 2 of the Revenue and Taxation Code, or to impose this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not be subject to tax by the state under the said provisions of that Code; the substitution shall not be made in Sections 6701, 6702 (except in the last sentence thereof), 671 l, 6715, 6737, 6797 or 6828 of the Revenue and Taxation Code; and the substitution shall not be made for the word “State” in the phrase “retailer engaged in business in this State” in Section 6203 or in the definition of that phrase in Section 6203.

(Ord. 5652 § 2, 2025: Ord. 2756 § 1 (part), 1973)

If a sellers permit has been issued to a retailer under Section 6067 of the Revenue and Taxation Code, an additional seller's permit shall not be required by this chapter.

(Ord. 2756 § 1 (part), 1973)

There shall be excluded from the measure of tax:

(a) The amount of any sales or use tax imposed by the state upon a retailer or consumer.

(b) The storage, use or other consumption of tangible personal property, the gross receipts from the sale of which has been subject to sales tax under a sales and use tax ordinance enacted in accordance with Part 1.5 of Division 2 of the Revenue and Taxation Code by any city and county, county, or city in this state.

(c) The gross receipts from sales to, and the storage, use or other consumption of property purchased by, operators of common carriers and waterborne vessels to be used or consumed in the operation of such common carriers or waterborne vessels principally outside the city.

(d) The storage or use of tangible personal property in the transportation or transmission of persons, property or communications, or in the generation, transmission or distribution of electricity or in the manufacture, transmission or distribution of gas in intrastate, interstate or foreign commerce by public utilities which are regulated by the Public Utilities Commission of the State of California.

(Ord. 2756 § 1 (part), 1973)

(a) The amount subject to tax shall not include any sales or use tax imposed by the state of California upon a retailer or consumer.

(b) The storage, use, or other consumption of tangible personal property, the gross receipts from the sale of which have been subject to tax under a sales and use tax ordinance enacted in accordance with Part 1.5 of Division 2 of the California Revenue and Taxation Code by any city and county, county, or city, in this state shall be exempt from the tax due under this chapter.

(c) There are exempted from the computation of the amount of the sales tax the gross receipts from the sale of tangible personal property to operators of aircraft to be used or consumed principally outside the city in which the sale is made and directly and exclusively in the use of such aircraft as common carriers of persons or property under the authority of the laws of this state, the United States, or any foreign government.

(d) In addition to the exemptions provided in Sections 6366 and 6366.1 of the California Revenue and Taxation Code the storage, use, or other consumption of tangible personal property purchased by operators of aircraft and used or consumed by such operators directly and exclusively in the use of such aircraft as common carriers of persons or property for hire or compensation under a certificate of public convenience and necessity issued pursuant to the laws of this state, the United States, or any foreign government is exempted from the use tax.

(Ord. 3495 § 1, 1983: Ord. 2756 § 1 (part), 1973)

(a) Section 2.32.130 shall become operative on January 1st of the year following the year in which the California Department of Tax and Fee Administration adopts an assessment ratio for state-assessed property which is identical to the ratio which is required for local assessments by Section 401 of the Revenue and Taxation Code, at which time Section 2.32.120 shall become operative.

(b) In the event that Section 2.32.130 becomes inoperative and the California Department of Tax and Fee Administration subsequently adopts an assessment ratio for the state-assessed property which is higher than the ratio which is required for local assessments by Section 401 of the

Revenue and Taxation Code, Section 2.32.120 shall become operative on the first day of the month next following the month in which such higher ratio is adopted, at which time Section 2.32.130 shall be inoperative until the first day of the month following the month in which the board again adopts an assessment ratio for state-assessed property which is identical to the ratio required for local assessments by Section 401 of the Revenue and Taxation Code, at which time Section 2.32.130 shall again become operative and Section 2.32.120 shall become inoperative.

(Ord. 5652 § 2, 2025: Ord. 2756 § 1 (part), 1973)

All subsequent amendments of the Revenue and Taxation Code which relate to the sales and use tax and which are not inconsistent with Part 1.5 of Division 2 of the Revenue and Taxation Code shall automatically become a part of this chapter.

(Ord. 2756 § 1 (part), 1973)

No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action or proceeding in any court against the state or the city, or against any officer of the state or the city, to prevent or enjoin the collection under this chapter, or Part 1.5 of Division 2 of the Revenue and Taxation Code, of any tax or any amount of tax required to be collected.

(Ord. 2756 § 1 (part), 1973)

Any person violating any of the provisions of this chapter is guilty of a misdemeanor, and upon conviction thereof shall be punishable as provided in Section 1.08.010 of this code.

(Ord. 3881 § 2, 1989: Ord. 2756 § 1 (part), 1973)

If any provision of this chapter or the application thereof to any person or circumstance is held invalid, the remainder of the chapter and the application of such provision to other persons or circumstances shall not be affected thereby.

(Ord. 2756 § 1 (part), 1973)

Ordinance No. 1709 dated August 27, 1956, as amended by Ordinance No. 2062 dated November 27, 1961, is repealed; provided, however, that said ordinance, as amended, shall remain applicable for the purposes of the administration of said ordinance and the imposition of and the collection of tax with respect to the sales of, and the storage, use or other consumption of tangible personal property prior to January 1, 1974, the making of refunds, effecting credits, the disposition of moneys collected, and for the commencement or continuance of any action or proceeding under said ordinance.

(Ord. 2756 § 1 (part), 1973)